Oil firms drive Hong Kong stocks into the black for third day

Telecom shares tumbled in China, however, after ZTE reportedly suspended smartphone sales in the nation, in the aftermath of the US’s ban on American technology exports to the company

PUBLISHED : Wednesday, 09 May, 2018, 9:13am
UPDATED : Wednesday, 09 May, 2018, 10:19pm

Hong Kong stocks closed higher on Wednesday, for the third day in a row, as oil companies extended their recent rally after US President Trump announced the country would withdraw from the Iran nuclear deal, and reimpose sanctions.

Shares in the Hong Kong stock exchange operator HKEX itself pulled higher, on the back of record-breaking earnings in the first quarter. But mainland China telecommunications shares tumbled after ZTE, the country’s second-largest telecoms firm, reportedly suspended smartphone sales in the nation, in the aftermath of the US ban on American technology exports to the company.

The Hang Seng Index rose 0.4 per cent, or 133.33 points, to end at 30,536.14.

Crude prices pushed higher after Trump announced the US would pull out of the Iran nuclear pact and reimpose sanctions on the Middle Eastern nation, a major oil exporter.

The three Chinese state-owned oil giants spiked higher as a result. CNOOC, its largest offshore oil producer, advanced 2.3 per cent to HK$13.52, PetroChina surged 4.4 per cent to HK$5.95, and refiner Sinopec gained 2.2 per cent to HK$7.88.

They contributed a combined 48 points to gains on the Hang Seng Index.

HKEX, the sole bourse operator in Hong Kong, briefly climbed nearly 2 per cent and closed up 0.3 per cent at HK$257.00, after posting a record quarterly profit of HK$2.56 billion (US$326 million), a 49 per cent rise on the same period a year ago.

Its average daily turnover also soared 97 per cent year-on-year to HK$146 billion during the quarter under review.

The exchange operator was even more bullish about its performance later this year, as MSCI’s upcoming inclusion of A shares into its global benchmarks could prompt investors to increase their exposure to the China market, which would be expected to accelerate growth momentum at HKEX.

Chinese internet giant Tencent Holdings rose 1 per cent to HK$394.60, lifting the Hang Seng Index by 28 points, the most by any single blue-chip stock.

“Some investors are hying up the stock before its earnings release next week,” said Tony Ho, research director for China Goldjoy Securities.

But he warned, too, about ongoing risk in the overall tech sector, as “uncertainty is still hanging over the US-China trade relations”.

Wednesday’s turnover for the main Hong Kong board, however, dropped 18 per cent to HK$84.3 billion from Tuesday.

Ho added that risks of a US-China trade war are still weighing on overall market sentiment, but that selected sectors could attract fund inflows, such as those that may benefit from MSCI’s landmark addition of A shares next month.

MSCI is expected to announce the initial list of eligible A shares on May 15 to be included in its benchmark indexes, which will become effective June 1. The index compiler will also reveal the results of a review of its China indexes, launched recently to prepare global investors for the June 1 inclusion.

In mainland trading, the Shanghai Composite Index dipped 0.1 per cent to close at 3,159.15. The start-up board index ChiNext also inched down 0.1 per cent to 1,855.81.

Telecoms shares slid. China United Network Communications declined 1.7 per cent to 5.86 yuan. Lootom Telcovideo Network tumbled 6.6 per cent to 13.22 yuan. Wuhan Yangtze Communication Industry dropped 2.3 per cent to 27.46 yuan.